Disability benefits

Disability benefits are financial payments made to eligible workers who cannot work due to a physical or mental condition.

Homebase Team

Min Read

What are disability benefits?

Disability benefits are financial payments made to eligible workers who cannot work due to a physical or mental condition. These benefits are designed to replace a portion of lost wages and help employees maintain financial stability while they are unable to perform their job duties.

As a small business owner, understanding how disability benefits work and whether your state or business is required to provide them can help you support your team, avoid compliance issues, and create a workplace that values employee well-being.

Types of disability benefits

There are two main types of disability benefits you might encounter as an employer:

Short-term disability (STD): Covers employees for a limited time, typically up to 3 to 6 months. It’s often used for injuries, surgeries, or temporary health conditions like pregnancy recovery.
Long-term disability (LTD): Begins after short-term disability ends and can last for years or even until retirement, depending on the policy.

These benefits may be offered through private insurance plans or provided by the state in certain regions.

Who pays for disability benefits?

It depends on your location and how your benefits are set up:

In some states (like California, New Jersey, and New York), employers are required to offer state-sponsored disability benefits and withhold contributions from employee paychecks.
Other employers may choose to provide private disability insurance as part of their benefits package.
Some plans are fully funded by the employer, while others are employee-paid or shared-cost.

You’ll want to check your state’s requirements and consider how a disability policy could benefit your team.

How disability benefits work for employees

To qualify for disability benefits, employees usually need to:

Be unable to work due to a medical condition
Provide documentation from a healthcare provider
File a claim with the appropriate state agency or insurance provider

If approved, they’ll receive a portion of their usual income (typically between 50% and 70%) for their leave.

It’s important to coordinate these benefits with other types of leave (like FMLA, if applicable) and communicate clearly with your team about expectations.

Why offering disability coverage matters

Even if not required by law in your state, offering disability benefits can:

Show your employees you care about their health and financial well-being
Boost morale and retention by offering meaningful support
Help team members return to work feeling valued and less financially stressed
Protect your business by having clear policies in place

A short-term disability plan, in particular, is a relatively affordable benefit that can go a long way in supporting hourly and part-time staff.

How to manage disability leave as an employer

When an employee goes out on disability leave, it’s important to:

Understand your legal responsibilities around job protection and benefits continuation
Communicate clearly and empathetically with the employee about next steps
Coordinate leave dates, paperwork, and expected return timelines
Adjust schedules or workloads to support your team while they’re away

Having clear, written policies and tools to manage them makes the process smoother for everyone involved.

How Homebase helps with compliance and leave tracking

Disability benefits and leave can get complicated, especially when multiple types of time off overlap. Homebase gives small businesses the tools to:

Track hours and paid/unpaid leave with one easy system
Maintain digital records to support compliance with labor laws
Store policies and employee handbooks in one place
Keep communication flowing with in-app messaging and updates

Explore Homebase’s HR and compliance tools to simplify how you manage leave, benefits, and team communication, without adding more to your plate.

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